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ELCOM INNOVATION PVT LTD  Vs HARISH SHARMA & ORS. -Judgment by Delhi High Court

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment Reserved on : 29th March, 2022
Judgment Delivered on : 21st April, 2022

+ CS(OS) 288/2021

ELCOM INNOVATION PVT. LTD. ….. Plaintiff
Through: Mr. Manav Gupta with Mr. Sahil Garg, Advocates.

versus

HARISH SHARMA & ORS. ….. Defendants
Through: Mr. Samar Bansal with Ms. Anindita Mitra, Advocates for D-1.

CORAM:
HON’BLE MR. JUSTICE AMIT BANSAL

JUDGMENT

AMIT BANSAL, J.
I.A. No.7635/2021 (u/O-XIII R-1 of CPC)
1. Allowed, subject to just exceptions.
I.A. No.10786/2021 (of the defendant No.1 for exemption from attestation of supporting affidavits and affidavit of service of counsel for the defendant no.1 through the oath commissioner), I.A. No.10787/2021 (of the defendant No.1 for exemption from filing certified copies, legible, typed copies of the annexures) & I.A. No.10788/2021 (of the defendant No.1 for exemption from filing official translation and typed copy of annexures/documents)
2. For the reasons stated in the applications, the same are allowed.

I.A. No.7634/2021 (u/O-XXXIX R-1 & 2 of CPC) & I.A. No.12977/2021 (for directions)
3. By the present order, I shall dispose of the applications filed on behalf of the plaintiff Company namely, I.A. No.7634/2021 and I.A. No.12977/2021.
4. I.A. No.7634/2021 has been filed by the plaintiff Company under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 (CPC), seeking an ad interim injunction, restraining the defendants from using, disclosing, disseminating, divulging, circulating, selling or transferring etc., in any manner, the proprietary sensitive and highly confidential information/data, including the intellectual property of the plaintiff Company. Though, prayer b in the aforesaid application was in respect of restraining the defendant No.1 from competing with the plaintiff Company during the subsistence of the Share Purchase and Shareholders Agreement dated 24th December, 2012 and from disclosing, selling or transferring any confidential information, including intellectual property of the plaintiff Company to the defendant No.2 or anyone else, including the competitors of the plaintiff Company, however, submissions have been made only in respect of disclosing confidential information.
5. The counsel for the defendant No.1 appeared on advance notice on 5th July, 2021, when the suit along with I.A. No.7634/2021 was first listed. Though no formal notice was issued in the aforesaid application, the counsel for the defendant No.1 has been heard at length on all subsequent dates before this Court.
6. I.A. No.12977/2021 has been filed by the plaintiff Company under Section 151 of the CPC, seeking a direction to the defendant No.1 to transfer his 7,517 shares in favour of the plaintiff Company for a consideration of Rs. 12,21,512.50/-.
7. Notice was issued in I.A. No.12977/2021 qua prayer (a) on 12th November, 2021. A reply has been filed to I.A. No.12977/2021 by the defendant No.1 and a rejoinder, thereto, has been filed by the plaintiff Company.
8. For the present applications to be decided, the necessary facts as pleaded by the plaintiff Company in the plaint are as follows:
(i) The plaintiff, Elcom Innovation Pvt. Ltd., is in the business of aerospace, communications, electronics, tactical communications, and homeland security, etc. and is a leader in the field of defence.
(ii) The defendant No.1, Mr. Harish Sharma, is an erstwhile employee and shareholder of the plaintiff Company. The defendant No.1 was appointed as a Director � Product Engineering w.e.f. 1st December, 2012. The defendant No.1 was also a party to the Share Purchase and Shareholders Agreement dated 24th December, 2012 of the plaintiff Company (hereinafter, referred to as the �SPSA�), in pursuance whereto the defendant No.1 was allotted 5.4% shareholding in the plaintiff Company.
(iii) The defendant No.2, Vihaas Design Technologies, is an entity engaged in the same business as the plaintiff Company and is managed by the defendants No.1 and 3.
(iv) Under the SPSA, the defendant No.1 had unequivocally undertaken to maintain confidentiality and to not venture into anti-competitive practice to the detriment of the plaintiff Company during the course of his employment and for a period of three years from the date of severance from the plaintiff Company.
(v) The defendant No.1 resigned from the plaintiff Company w.e.f. 10th April, 2018, pursuant whereto, full and final settlement of the dues of defendant No.1 was done by the plaintiff Company.
(vi) In the month of January, 2020, the IT administrator of the plaintiff Company observed unusual activity in the email accounts of the key employees of the plaintiff Company. It was noticed that from the official email IDs of the Vice President of the plaintiff Company, Mr. Sumeet Mallikarjun i.e., sumeet@elcominnovations.com and the marketing coordinator of the plaintiff Company, Ms. Diksha Singh i.e., diksha@elcominnovations.com, emails were being forwarded to one email ID i.e., sumeetmalikarjun@outlook.com (hereinafter, referred to as the �fake email ID�).
(vii) A criminal complaint was lodged by the plaintiff Company on 3rd February, 2020 with the Centre for Cyber Crime Investigation, Noida against unknown persons.
(viii) In the course of the investigation by the Cyber Cell, it came to light that the fake email ID, where the confidential and sensitive information was being forwarded to, was created by the defendant No.1.
(ix) The authorities registered an FIR against the defendant No.1 bearing FIR No.786 on 12th December, 2020 at P.S. Sector-39, Noida for commission of offences under Section 420 of the Indian Penal Code, 1860 and Section 66 of the Information Technology Act, 2000.
(x) The defendant No.1 entered into a Consultancy Agreement dated 16th April, 2018 with the defendant No.2, which is a competitor of the plaintiff Company.
(xi) Pursuant to the defendant No.1 routing confidential and sensitive information from the plaintiff Company to the fake email ID, by misusing the confidential information and data of the plaintiff Company, the defendants began to poach the clients of the plaintiff Company.
(xii) Since, the defendant No.1 continues to hold 5.4% shareholding in the plaintiff Company and continues to be a shareholder of the plaintiff Company, by misusing the confidential and sensitive information/data of the plaintiff Company for making unlawful gains for the defendants and causing loss to the plaintiff Company, the defendant No.1 has committed material breach of the SPSA.
9. Based on the aforesaid pleadings, the present suit has been filed by the plaintiff Company, seeking a decree of permanent injunction against the defendants, restraining them from using, disclosing, disseminating, divulging, circulating, selling or transferring, etc., in any manner, the proprietary, sensitive and highly confidential information/data of the plaintiff Company and other ancillary reliefs, including damages.
10. The counsel for the plaintiff Company, with respect to I.A.No.12977/2021, has made the following submissions:
(i) As per the terms of the SPSA, the defendant No.1 was to transfer his 7,517 shares in favour of the plaintiff Company for a consideration of Rs.12,21,512.50/-.
(ii) In the reply to the I.A.No.12977/2021, the defendant No.1 has given his willingness to sell his shares to the plaintiff Company upon the determination of �Fair Market Value� in terms of the SPSA.
11. The counsel for the plaintiff Company, with respect to I.A. No.7634/2021, has made the following submissions:
(i) The suit has been filed based on two separate causes of action, (a) on account of the revelation, pursuant to the investigation conducted by the Cyber Cell, that the defendant No.1 had hacked into the server of the plaintiff Company in order to steal confidential information/data; and, (b) breach of the terms of the SPSA entered into between the plaintiff Company and the defendant No.1.
(ii) After the filing of the present plaint, a chargesheet has been filed by the Cyber Cell on 16th April, 2021 in FIR No.786, wherein it has been noted that the phone number of the defendant No.1 was used for accessing the fake email ID, whereto the emails from the plaintiff Company�s key employees were forwarded. He further submits that cognizance has been taken of the chargesheet by the Sessions Court on 1st September, 2021 and bailable warrants have been issued against the defendant No.1.
(iii) In support of the grant of an ad interim injunction, reliance is placed on the judgments in John Richard Brady & Ors. Vs. Chemical Process Equipments P. Ltd. & Anr., AIR 1987 DELHI 372 and Danieli Corus BV Vs. Steel Authority of India, 2018 (246) DLT 329, the judgment dated 10th October, 2012 of the High Court of Karnataka in M.F.A. No.1682/2010 titled Homag India Private Ltd. Vs. Ulfath Ali Khan & Ors., and the order dated 24th July, 2018 of this Court in CS(OS) 351/2018 titled Honeywell International India (Pvt) Ltd Vs. Kush Kumar Bhateja.
12. The counsel for the defendant No.1, with regard to I.A.No.12977/2021, has made the following submissions:
(i) The averments made in I.A.No.12977/2021 are at variance with the averments made in the plaint.
(ii) The plaintiff Company has failed to make any amendments in the plaint as originally filed.
(iii) In view of the fact that the plaintiff Company itself has defaulted in its obligations to purchase the shareholding of the defendant No.1 in terms of the SPSA, the defendant No.1 cannot be considered to be a shareholder of the plaintiff Company and, therefore, the terms of the SPSA are not binding on the defendant No.1. In this regard, reliance is placed on Articles 12.4, 14.2 and 14.3 a. ii) of the SPSA.
(iv) The aforesaid application has been filed at a very belated stage by the plaintiff Company and only after a Default Notice in terms of the SPSA was issued by the defendant No.1 to the plaintiff Company.
13. The counsel for the defendant No.1, with regard to I.A. No.7634/2021, has made the following submissions:
(i) There is suppression of material facts by the plaintiff Company as noted by the previous orders of this Court and, therefore, no ground is made out for the grant of injunction. Attention in this regard has been drawn to the orders dated 5th July, 2021, 19th July, 2021, and 27th August, 2021.
(ii) No averments have been made with regard to the confidential information that has been allegedly misused by the defendant No.1. In this regard, attention of the Court has been drawn to paragraph 12 of the plaint, where only vague averments have been made in relation to the acts committed by the defendant No.1. Reliance is placed on the judgment of this Court dated 17th September, 2018 in CS(COMM) 735/2016 titled Navigators Logistics Ltd. Vs. Kashif Qureshi & Ors., to contend that no injunction order can be passed in the absence of details of confidential information, breach of which has been alleged by the plaintiff Company.
(iii) In the investigations conducted by the Cyber Cell, there is nothing to suggest that the fake email ID was created by the defendant No.1 or that he committed any fraudulent act of usage of such fake email ID. The chargesheet only states that this email ID was accessed by using the mobile internet facility of the defendant No.1.
14. In rejoinder, it has been submitted on behalf of the plaintiff Company as follows:
(i) The chargesheet clearly records that the fake email ID was accessed on multiple occasions using the mobile number of the defendant No.1.
(ii) The details of the confidential information, which has been misused by the defendant No.1, have not been provided in the plaint as the nature of the contracts entered into by the plaintiff Company with his clients are highly confidential and sensitive. Therefore, details thereof cannot be provided by the plaintiff Company.
15. I have heard the counsels for the parties.
16. In order to decide I.A. No.12977/2021 and I.A. No.7634/2021, at this stage, it may be relevant to reproduce some of the Articles of the SPSA that are relevant for deciding the said applications:
�ARTICLE 12:

TRANSFER OF SHARES

xxx xxx xxx

12.4 Right of First Refusal

(a) In the event that, upon the expiry of the Lock-in Period, any of the Shareholders (the �Selling Shareholder�) intends to Transfer all or any part thereof, of the Shares held by it to a Person not being its Affiliate, the Selling Shareholder shall first offer (the �Offer�) to sell the Shares by sending a notice of the Offer in writing (the �Notice�) to the other Shareholders (the �Non-Selling Shareholders�), irrevocably offering to sell the Shares to the Non- Selling Shareholders.

(b) The Notice shall clearly stipulate (i) the number of Shares the Selling Shareholder desires to sell (the �Offered Shares�) (ii) the price at which the Selling Shareholder desires to sell the Offered Shares (the �Offer Price�).

(c) Within 30 Business Days of the receipt of the Notice by the Non-Selling Shareholders (the �Offer Period�), the Non-Selling Shareholders may at its option send a notice (a �Response Notice�) in writing to the Selling Shareholder and the Company making an irrevocable offer to buy the Offered Shares at the Offer Price.

(d) If the Non-Selling Shareholders elect to send the Response Notice, the Selling Shareholder shall transfer the Offered Shares to the Non-Selling Shareholders in proportion to their current Shareholding, free of all Liens and such ‘Transfer shall be completed within thirty (30) Business Days from the date of the Response Notice.

(e) If the Non-Selling Shareholders do not elect to send the Response Notice within the Offer Period, or if the Non-Selling Shareholders communicate a refusal to act upon the Notice, the Selling Shareholder shall be free to sell the Offered Shares to any third Person (the �Proposed Buyer�) on terms no more favourable than those offered by the Selling Shareholder to the Non Selling Shareholders, within 30 daysfrom the end of Offer Period or from the date of communication of its refusal by the Non Selling Shareholders whichever is earlier and immediately upon finalization of arrangement in respect of the Offered Shares with the Proposed Buyer, communicate the name and the particulars of the Proposed Buyer to the Non-Selling Party Provided such Proposed Buyer is not carrying on business competing with the Company. If the Offered Shares are not sold within such period on such terms, the rights of the Non-Selling Shareholder pursuant to this Article 12.4 and Article 12.5 shall again take effect with respect to any Transfer of Shares in any other manner.

(f) The Proposed Buyer (as defined hereinabove) shall execute the Deed of Adherence in the form set out in Schedule VIII of this Agreement.

xxx xxx xxx

ARTICLE 14:

TERM AND TERMINATION

xxx xxx xxx

14.2 Events of Default

Each of the following shall constitute an event of default (�Event of Default�) for the purposes of this Agreement:

a. In the event that either of the Parties (the �Defaulting Party�) is in breach or fails to observe or comply with the provisions and obligations contained in Articles 12 (Transfer of Shares), 17 (Non-Solicitation), 18 (Confidentiality) and 20 (Non-Compete) hereof, which breach or failure, if capable of cure or remedy, has not been cured or remedied within thirty (30) Business Days of the receipt of written notice of such breach or failure (�Default Notice�) from the other Party (the �Non-Defaulting Party�); or

xxx xxx xxx

14.3 Consequences of Event of Default

a. Upon the occurrence of an Event of Default as specified in Article 14.2 (a) above, the Agreement shall be liable to be terminated by the Non Defaulting Party and the Defaulting Party shall, at the sole discretion of Non Defaulting Party, either
i) be obligated to sell all (but not some only) of its Shares to the Non-Defaulting Party and/or its nominee at price equal to 75% of a Fair Market Value arrived at in accordance with the process set out in Article 14.3 (d) below provided the Non-Defaulting Party is willing to buy the Shares of the Defaulting Party, or
ii) be obligated to purchase all (but not some only) of the Shares held by the Non-Defaulting Party and/or its Affiliates at a price equal to 125% of the Fair Market Value, provided the Non-Defaulting Party is willing to sell its Shares to the Defaulting Party.

xxx xxx xxx

d. The �Fair Market Value� of the Shares for the purpose of Article 14.3(a) shall be determined by an independent valuer of international repute (so called �Big Four� accounting firm), appointed by the Non-Defaulting Party. Such valuer shall be appointed within thirty (30) Business Days of the date of the Default Notice and shall determine the Fair Market Value within thirty (30) Business Days of its appointment. The valuer shall base its valuation upon generally accepted international standards for valuation, and shall consider such factors as historic performance, book value, market comparables and discounted cash flow approach. Provided the market comparables shall be drawn from companies having similar operations in the same territory where the Company operates in.

e. The sale and purchase of Shares pursuant to the exercise by the Non-Defaulting Party of its rights under Article 14.3(a) shall be completed within 30 Business Days of the determination of the Fair Market Value in accordance with Article 14.3(d).

xxx xxx xxx

14.4 Termination of this Agreement

xxx xxx xxx

c. The provisions of Article 14 (Term and Termination), Article 20 (Confidentiality), Article 21 (Notices), Article 23(Governing Law and Dispute Resolution) as well as all other miscellaneous provisions of Article 24 (Miscellaneous) as are applicable or relevant thereto, shall survive termination of this Agreement.

xxx xxx xxx

ARTICLE 20:

CONFIDENTIALITY

20.1 Each of the Parties shall at all times use their best endeavours to keep confidential (and to ensure that its employees and agents shall keep confidential) any confidential information which it may acquire in relation to the Company or in relation to the clients, business or affairs of the other Party (or any of its subsidiary). Each Party shall use all its respective powers to procure (to the extent that it can) that the Company shall use all reasonable endeavours to ensure that the officers, employees and agents of each of them shall observe a similar obligation of confidence in favour of the Parties hereto. The term �Confidential Information� as used in this Agreement includes all information and other materials acquired by a Party or its representative or agent from the other Party or its representative or agent in relation to the transactions contemplated by this Agreement and in relation to the Parties or which, under the circumstances of disclosure ought to be treated as confidential, whether written, oral or in any other form, and whether such information is furnished before, on or after the date of this Agreement, and shall include information and materials:

a. Relating to the terms and conditions of this Agreement and all documents in furtherance of this Agreement;

b. Relating to the organization, business, technology, finance, transactions, affairs, financial and accounting books and records, marketing or promotion of any product or services, business policies or practices, customers, potential customers or suppliers of information, trade secrets, source codes, documentation, formulae, and technology of a Party or any other party;

c. Received from the other Party that a Party is obligated to treat as confidential; and

d. Prepared by the Party or its respective directors, officers, managers, partners, members, employees or legal, financial or professional advisors or bankers that contain or otherwise reflect, or are generated from, Confidential Information.

and shall not use or disclose such information except with the consent of the other Party or in accordance with the order of a court of competent jurisdiction or, in the case of information relating to the Company, for the advancement of the Business.

xxx xxx xxx

20.3 In the event that for any reason this Agreement shall lapse and the transactions contemplated hereby shall not be implemented, each Party shall on written demand of the other Party immediately return or destroy the Confidential Information pertaining to the Party making such request.�

17. First, I propose to take up I.A.12977/2021.
18. The relevant facts, which emerge from a reading of the pleadings and documents, in the context of the SPSA and its provisions as stated aforesaid, may be consolidated as follows:
(i) Vide the Notice of Offer dated 12th November, 2018, the defendant No.1, the Selling Shareholder, communicated his intention to sell 7,517 shares held by him, constituting 5.4% of the total shareholding of the plaintiff Company, to the Non-Selling Shareholders at an Offer Price of Rs.130/- per share. The aforesaid Offer was made in terms of Article 12.4 of the SPSA bearing the title �Right of First Refusal�.
(ii) The aforesaid Offer was accepted by the Non-Selling Shareholders of the plaintiff Company vide the Response Notice dated 6th December, 2018 as per Article 12.4(c) of the SPSA, which was made note of by defendant No.1 vide the Communication dated 14th December, 2018, whereby the Non-Selling Shareholders of the plaintiff Company were asked to pay the sum of Rs.9,77,210/- as consideration value of the shares.
(iii) The transfer of the shares from the defendant No.1 to the Non-Selling Shareholders of the plaintiff Company was to be completed within thirty business days from the date of the Response Notice.
(iv) However, the Non-Selling Shareholders of the plaintiff Company failed to transmit the consideration in respect of the transfer and in this regard, a Default Notice dated 25th January, 2019 was issued by the defendant No.1, being the Non-Defaulting Party, to the Non-Selling Shareholders of the plaintiff Company, being the Defaulting Parties, whereby the Defaulting Parties were requested to cure the Event of Default within thirty business days from the receipt of the said Default Notice.
(v) The plaintiff Company, thereafter, sent a Legal Notice to the defendant No.1 dated 15th February, 2019, alleging commission of �serious offences, breach and theft� and which allegations were denied by the defendant No.1 vide Reply dated 28th February, 2019. A Rejoinder dated 25th March, 2019 thereto on behalf of the plaintiff Company was sent to the defendant No.1.
(vi) Another Default Notice dated 7th March, 2019 was issued by defendant No.1 to the plaintiff Company in terms of Article 14.3 a. of the SPSA. It was stated therein since the Non-Selling Shareholders of the plaintiff Company had failed to pay the consideration for the transfer of the shares of the defendant No.1, and which Event of Default had remained uncured, there was a default committed on behalf of the Non-Selling Shareholders of the plaintiff Company. In view of the aforesaid, in terms of Article 14.3 a. ii) of the SPSA, the SPSA was liable to be terminated and in such circumstance, under Article 14.3 a. ii) of the SPSA, the Non-Selling Shareholders of the plaintiff Company were obligated to purchase all of the shares held by the Non-Defaulting Party, the defendant No. 1, at a price equal to 125% of the �Fair Market Value� provided by the defendant No. 1, consequent to the process under Article 14.3 d. of the SPSA.
(vii) Accordingly, vide the aforesaid Notice the defendant No.1 terminated the SPSA and proceeded to take steps for fixation of the �Fair Market Value� of the shares in terms of Article 14.3 d. of the SPSA.
(viii) Vide Reply dated 20th March, 2019 by the plaintiff No.1 Company, it was stated that the Article 14.2, being �Events of Default� and Article 14.3, being �Consequences of Event of Default� were very specific to the �Parties� of the SPSA as defined in the SPSA and not to the individual Members of the Tech Group. Therefore, Articles 14.2 and 14.3 were only applicable in case there is an Event of Default committed by a Party and were not applicable for a default that may be committed by a Member towards any other Member. Furthermore, it was stated that unless a satisfactory resolution of the allegations against the defendant No.1 was done, the Non-Selling Shareholders of the plaintiff Company would not like to proceed with the transfer of shares as agreed by vide Response Notice dated 6th December, 2018.
(ix) The defendant No.1 contacted the plaintiff Company vide Letter dated 5th April, 2019 to submit the documents required for the determination of �Fair Market Value� of the shares of the plaintiff Company, however, the plaintiff Company refused to provide such information vide Letter dated 10th April, 2019, stating that the claim of the defendant No.1 of termination of the SPSA under Article 14.3 of the SPSA was not sustainable.
19. It is to be noted that the aforesaid developments and documents do not find mention in the plaint and have been brought on record as additional documents pursuant to the liberty granted by this Court vide order dated 5th July, 2021. As noted in the order dated 12th November, 2021, though the counsel for the plaintiff Company had submitted that the plaintiff Company would be moving an application seeking to amend the plaint, however, the same has not been moved.
20. The predecessor Bench of this Court in the order dated 27th August, 2021 has already dealt with the contention of the plaintiff Company that the Article 14.2, being �Events of Default� and Article 14.3, being �Consequences of Event of Default� were very specific to the �Parties� of the SPSA as defined in the SPSA and not to the individual Members of the Tech Group as follows:
�11. To a query from the Court as to how, in that case, Defendant No.1 could be said to have breached Clause 20.1 or Clause 22.1 of the SPSA, when the obligations under both these clauses attach only to �parties� to the SPSA and not to the individual members of any of the parties, Mr. Gupta seeks to submit that, where the SPSA casts an obligation on any of the parties, that obligation would � to use the expression employed by Mr. Gupta � �percolate down� to the individual members of the parties. As such, he submits, the obligations cast under Clause 20.1 and 22.1 of the SPSA would percolate down to Defendant No. 1, as a member of the Tech Group.

12. To my mind, these submissions are inherently contradictory in nature. Defendant No. 1 is either a party to the SPSA or is not a party thereto. He cannot be treated as a �party� for the purposes of Clauses 20.1 and 22.1, and not a �party� for the purposes of Clause 14.4. The SPSA does not contemplate multiple definitions of the word �party�. If the Tech Group is to be treated as a party to the SPSA, Defendant No.1 cannot, in my view, be individually bound by the covenants in Clause 20.1 and 22.1. If, on the other hand, Defendant No.1 is to be treated as a party to the SPSA for the purposes of Clause 20.1 and 22.1, he would equally be a party to the SPSA for the purpose of Clause 14.4. No concept of �percolating down� of responsibilities and obligations under the SPSA finds any place therein. The argument, therefore, though ingenious, fails to impress.�

21. I am in agreement with the aforesaid observations. It cannot be so that the defendant No.1 be treated as a �Party� for the purposes of the provisions of confidentiality in the SPSA and not be treated as a �Party� for the purposes of the provisions of term and termination in the SPSA.
22. In light of the aforesaid, it has rightly been contended on behalf of the defendant No.1 that the Offer Price quoted by the defendant No.1 in his letter dated 12th November, 2018 was only relevant for the purposes of Article 12.4 of the SPSA, being the �Right of First Refusal� of the Non-Selling Shareholders of the plaintiff Company. Since the Non-Selling Shareholders of the plaintiff Company defaulted in making payment to the defendant No.1 in pursuance to the aforesaid Offer, the aforesaid Offer price of Rs.130/- ceased to apply. It is further to be noted that the defendant No.1 gave an opportunity to the Non-Selling Shareholders of the plaintiff Company to cure the Event of Default through the Default Notice dated 25th January, 2019. However, the Non-Selling Shareholders of the plaintiff Company failed to cure the Event of Default. Rather, vide Reply dated 20th March, 2019, the Non-Selling Shareholders of the plaintiff Company stated that they would not like to proceed with the transfer of shares as agreed by vide Response Notice dated 6th December, 2018. Thereafter, the defendant No.1 invoked Articles 14.3 a. ii) and 14.3 d. of the SPSA for determination of the �Fair Market Value� of his shares in order for the Non-Selling Shareholders of the plaintiff Company to purchase the said shares of the defendant No.1. In this regard, the defendant No.1 has placed reliance on the email exchange with Ernst & Young (hereinafter, referred to as �EY�). Vide email dated 30th March, 2019, Com Legal Associates LLP, on behalf of the defendant No.1, sent scanned documents for determination of the �Fair Market Value� of the shares held by defendant No.1. EY vide email dated 1st April, 2019 requested the defendant No.1 to provide general information for conducting the valuation exercise. The defendant No.1 in turn contacted the plaintiff Company vide letter dated 5th April, 2019 to submit the documents required for the determination of �Fair Market Value� of the shares of the plaintiff Company, however, the plaintiff Company refused to provide such information vide Letter dated 10th April, 2019.
23. It is clear from the reading of the above said Articles of the SPSA that having failed to pay the Offer Price within thirty business days from the date of the Response Notice, the Non-Selling Shareholders of the plaintiff Company relinquished their right to purchase the shares at the said Offer Price. Thereafter, an Event of Default came into play and as per Article 14.3 a. ii), and the shares could only be purchased by the Defaulting Parties of the plaintiff Company at 125% of the �Fair Market Value� of the shares, as determined by an independent valuer of international repute, provided the defendant No.1 was willing to sell the shares to the Defaulting Parties.
24. In light of such facts and circumstances, the defendant No.1 cannot be directed to transfer his 7,517 shares in favour of the plaintiff Company for a consideration of Rs. 12,21,512.50/-, being 125% of the original Offer Price of the shares.
25. Consequently, I.A. No.12977/2021 is liable to be dismissed.
26. I now propose to take up I.A. No.7634/2021.
27. It is the case of the plaintiff Company that even after the cessation of his employment with the plaintiff Company, the defendant No.1 has been accessing confidential and sensitive information of the plaintiff Company by hacking into the email IDs of the key employees of the plaintiff Company, routing confidential information to the fake email ID, and misusing the aforesaid confidential information. The confidentiality provisions as contained in the SPSA have been reproduced above.
28. Though no reply has been filed on behalf of the defendant No.1 to the aforesaid application but in the course of oral submissions, various grounds have been taken to oppose the grant of relief as prayed in I.A. No.7634/2021.
29. One of the grounds taken by the defendant No.1 is that in view of the fact that the Non-Selling Shareholders of the plaintiff Company themselves have defaulted in their obligation to purchase the shareholding of the defendant No.1, the terms of the SPSA are not binding on the defendant No.1. However, this submission overlooks Articles 14.4 c. and 20.3 of the SPSA as extracted above. Article 14.4 c. of the SPSA specifically provides that the provisions of Article 20, being �Confidentiality� shall survive the termination of the SPSA. Similarly, Article 20.3 specifically provides that in the event the SPSA lapses, there is an obligation on each of the parties to return or destroy the confidential information pertaining to other party. Therefore, even if the SPSA had been terminated by the defendant No.1, the provisions of confidentiality shall continue to apply and the defendant No.1 shall remain bound by the terms therein. Reference in this regard may be made to the judgment of this Court in John Richard Brady Vs. Chemical Process Equipments Pvt. Ltd., AIR 1987 Del. 372, wherein it has been held that even in the absence of a contract, information received under a duty of confidence can be protected.
30. Next, it has been contended on behalf of the defendant No.1 that the plaintiff Company has suppressed material facts from the Court.
31. This Court in the order dated 19th July, 2021 has noted that documents and facts pivotal to maintaining the claim of the plaintiff Company, admittedly, do not find any reflection in the plaint. Vide order dated 27th August, 2021, this Court has also noted that the submission of the plaintiff Company on affidavit that the suppressed communications were not relevant for the case at hand, could not prima facie be accepted. Thus, this raises the issue of whether, having failed to make any reference to these communications, the plaintiff Company can seek to urge any rights, against the defendant No.1.
32. While no interim relief has been granted in favour of the plaintiff Company till date and the aforesaid documents have subsequently been placed on record, it cannot be denied that the suppressed documents and facts are crucial in determining the reliefs as sought in the plaint and applications by the plaintiff Company. Though such suppression of material facts itself is a ground for rejection of the plaint, I have proceeded to consider I.A. No.7634/2021 on merits.
33. The submission made on behalf of the defendant No.1 is that only vague averments have been made on behalf of the plaintiff Company with regard to the confidential information that has been allegedly misused by defendant No.1. In this regard, the plaintiff Company has placed on record the chargesheet filed, wherein it has been recorded that the fake email ID was accessed on multiple occasions using the mobile number of the defendant No.1. In paragraphs 11 and 12 of the plaint, the plaintiff Company has averred to the illegal acts being committed by the defendant No.1 by using the confidential information as follows:
�11. That by violating the terms of the Shareholders Agreement and by gaining illegal access to the sensitive information, the Defendants got hands on a US $ 7.6 Million Purchase Order, which the Plaintiff had received from one of its international clients and had routed the same to a competitor. The said competitor had created misunderstandings between the Plaintiff Company and the concerned Norwegian Company, who had in fact blamed the Plaintiff Company for breach of contract and violation of confidentiality clause. The Plaintiff has reason to believe that the Defendants have already/might misused/misuse the said classified information/data with a palpable view of manipulating bidding processes in order to steal contracts out of the hands of the Plaintiff Company.

12. By committing the illegal acts as aforesaid, the Defendants have and still continuing to:

(a) Reveal Plaintiff Company�s bidding prices for various government tenders to competitors;

(b) Reveal the Plaintiff Company�s Intellectual Property Rights to its competitors leading to copying of its products;

(c) Divert contracts of the Plaintiff�s Company to third party competing entities;

(d) Indulge in misleading the Plaintiff Company�s international clients with unsolicited and fallacious information causing loss to the Plaintiff Company;

(e) Instigating the Plaintiff�s suppliers to significantly increase their prices by divulging Plaintiffs profit margins.
Endanger the National Security of the Country.�

34. Upon the enquiry of this Court as to the particulars of the confidential information as has been misused by the defendant No.1, it has been repeatedly stated by the counsel for the plaintiff Company that the information is such which cannot be disclosed.
35. At this stage, when the Court is required to take the prima facie view of the matter, it may be noted that the said chargesheet is the only document which suggests a link between the defendant No.1 and the fake email ID on which, the information was being forwarded from the email accounts of the key employees of the plaintiff Company. However, the chargesheet by itself does not provide any particulars of the confidential information as was routed to the fake email ID.
36. This Court in Navigators Logistics Ltd. (supra) has held as follows:
�22. What is thus for adjudication is, whether there can be any copyright in a list of customers/clients with their contact persons/numbers maintained by the service provider. Though the plaintiff has in the plaint generally pleaded database pertaining to, running of business accounts information, airway drawings, airway bills templates, plans, reports, taxes and other financial information, process, financial/administrative and/or organizational information as well as transactions based templates and internal notings and trade secrets of the plaintiff company, but the said words/phrases, though high-sounding, are vague and do not constitute a plea in law within the meaning of Order VI Rules 2, 4, 9 and Order VII Rules 1(e) and 7 of the Code of Civil Procedure, 1908 (CPC). In this context, it may be also mentioned that using such high-sounding/phrases which in fact have no content or meaning, a large number of suits are filed in this Court against the ex-employees and it has often been found that interim injunctions issued restraining the ex-employees from divulging the same to any other person remain unenforceable in the absence of particulars and with applications under Order XXXIX Rule 2A of the CPC being filed with respect to all communications made by such employees with others and with it being absolutely impossible for the Court to determine whether the communication is in violation of the interim order. It is for this reason only that Section 41(f) of the Specific Relief Act, 1963, and principles whereof are applicable to temporary injunctions also, prohibits grant of injunction to prevent, on the ground of nuisance, an act of which it is not reasonably clear that it will be a nuisance. Similarly, without specifying the information, disclosure of which is sought to be restrained, an injunction cannot be granted; rather I have wondered the purport of the interim order dated 3rd June, 2016 in this suit, restraining the defendants from utilizing, exploiting, copying, transmitting, publishing or releasing any confidential information and trade secrets of the plaintiff to any entity for any purpose whatsoever, without specifying as to which is that confidential information and trade secret. It is for this reason that I have hereinabove observed that what is for adjudication is, whether list of customers/clients with their contact numbers prepared/drawn up by a service provider can be said to be a work in which such service provider can have copyright.

xxx xxx xxx

39. Confidentiality and secrecy is claimed in the same works in which copyright is claimed viz. data, information and trade secrets residing in the electronic devices without again specifying the particulars thereof or secrecy thereof. Mere mention of research process, financial/administrative and/or organizational matter or transaction or affairs of the company or invention or discovery or patent protection does not satisfy the requirements of pleadings. The plaintiff as per its own admission is engaged in the business of providing logistics and freight forwarding services and is not engaged in any research work, it was incumbent for the plaintiff to, in the plaint, plead how the data etc. in which confidentiality is claimed is different from data of any other entity engaged in such business and what is secret about the same and what steps besides the clause aforesaid in the letters of appointment of defendants no. 1 to 8 have been taken by the plaintiff to maintain secrecy/confidentiality thereof. The plaint in this regard is vague and cannot be put to trial. The whole purpose of pleadings in a civil suit is to let the opponent know the case to be met and which crystallizes ultimately in issues on which the parties go to trial. If such rules of pleadings are not to be adhered to, it will result in a fishing and roving enquiry and enable a party to the suit to secure a victory by springing a surprise during the course of trial. Similarly, an injunction qua confidentiality as sought, even if granted would be vague and unenforceable as aforesaid. This Court cannot pass such unenforceable order, the meaning whereof is not clear. It cannot be known, neither to the Court nor to the defendant as to what the defendant is injuncted from doing.�

37. In the present case as well, the plaintiff Company has in the plaint generally pleaded that the defendant No.1 has access to the plaintiff Company�s bidding prices for various government tenders, its intellectual property rights and profit margins, upon the alleged misuse of which the defendant No.1 is diverting contracts of the plaintiff Company to third party competing entities, indulging in misleading the plaintiff Company�s international clients with unsolicited and fallacious information and instigating the plaintiff Company�s suppliers to significantly increase their prices. However, in light of the holding in Navigators Logistics Ltd. (supra), the said words/phrases are vague. This Court cannot restrain the defendants from using, disclosing, disseminating, divulging, circulating, selling or transferring, etc., in any manner, the proprietary, sensitive and highly confidential information/data, including the intellectual property of the plaintiff Company, without specifying as to which is that confidential information and data. If an injunction qua confidentiality as sought is granted, the same would be vague and unenforceable. This Court cannot pass such an unenforceable order, the meaning whereof is not clear at this stage, as it cannot be known to the Court or to the defendants as to what the defendants are injuncted from doing.
38. In the case of Danieli Corus BV (supra), this Court has noted that the order of injunction as sought could not be granted in general terms and in the said case, the injunction was restricted to only those drawings and information that were relating to the proprietary items of the petitioner. Furthermore, in the case of Homag India Private Ltd. (supra), in the facts and circumstances of the case, the High Court of Karnataka granted an order of temporary injunction with reference to specific names stated in the product catalogue of the plaintiff therein for a limited period to avoid a situation of grant of an order of temporary injunction on vague terms and to avoid likelihood of the plaintiff therein misusing the order to curb the business activities of the defendant therein. Even paragraph 11 of the order of this Court in Honeywell International Pvt. Ltd. (supra), specifically notes that the large amount of confidential information, which had been transferred by the defendant therein to an external media prior to returning of the laptop to the plaintiff therein, had been contained in a tabular form from pages 39 to 62 of the documents and the defendant therein was restrained from directly or indirectly disclosing, selling or transmitting the confidential data, including the files mentioned at pages 39 to 62 of the documents to a third party. Thus, in the said aforesaid case, the Court had been privy to the confidential information in respect of which the injunction was sought. Consequently, none of the said judgments/orders come to the aid of the plaintiff Company to warrant the grant of an interim injunction, restraining the defendants from using, disclosing, disseminating, divulging, circulating, selling or transferring etc., in any manner, the proprietary sensitive and highly confidential information/data, including the intellectual property of the plaintiff Company.
39. Therefore, in my view, the plaintiff Company has not made out a prima facie case in its favour for the grant of an interim injunction.
40. Consequently, both, I.A. No.12977/2021 and I.A. No.7634/2021 are dismissed.

CS(OS) 288/2021

41. List on 8th September, 2022.

AMIT BANSAL, J.
APRIL 21, 2022
dk

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